A new frontier for the life sciences industry

Accenture’s Chris McManus explores the Integrated Business Model within the life science industry.

In today’s challenging environment, life sciences companies – from established pharmaceutical and medical technology companies to emerging biotech organisations—have a tougher job than ever to achieve longevity, growth and profitability. Developed markets, which for many years were a hotbed for growth and profit, are hitting a plateau. The expiration of long-term profitable patents has placed incredible financial pressure on many companies. Meanwhile, significant competitive and regulatory pressures, combined with an increasing need to show evidence of an improved patient outcome, are limiting the ability of pharmaceutical companies to bring new drugs to market.

Health care reform in the United States and around the globe has left the entire market in a state of uncertainty. In addition, dynamic growth markets such as biotech and biosimilars are rocketing beyond their companies’ current capabilities. Given these challenges, the industry must take a long, hard look at whether their business delivery models are on the right trajectory to a secure and profitable future.

“Health care reform in the United States and around the globe has left the entire market in a state of uncertainty.”

As a result of these developments, life sciences companies are increasingly turning to an integrated business services (IBS) model to push the traditional shared services concept to the next level by delivering more business value. This model integrates functions seamlessly so companies can easily execute their business objectives with exceptional speed, reliability and cost efficiency.

An integrated business service model is a potential game-changer for the industry. The rapidly changing business environment means companies must examine how to better leverage the investment in their back- and middle-office capabilities. While cost reductions and service improvements are still important, life sciences companies need to focus on improving business results from all perspectives.

Over the past 20 years, shared services has become the prominent operating model for business support services because it has demonstrated it can successfully deliver sustainable cost and service improvements year after year. However, the results that an IBS model can deliver dwarf the benefits that can be realised by pulling the same old levers of the past. They include the ability to maximise R&D innovation, quickly enter new markets, better manage mergers and acquisitions and respond in a more agile way to customers’ needs and preferences, in order to help deliver improved patient outcomes.

What distinguishes an IBS model from earlier incarnations of shared services (including single function shared services, multi- function shared services and global business services) is how advanced the IBS model is in terms of the five following characteristics, when compared to other shared services model:

• Strategic elevation: The model operates as an independent, multi-service business unit that helps companies achieve sustained global productivity and a culture of greater innovation, as opposed to just back-office function optimisation.

• Service value orientation: The model integrates people, processes and technology1 across functions to deliver one-stop-shop services. It delivers advanced end to end services, not just better transactions at a lower cost.

“An integrated business service model is a potential game-changer for the industry.”

• Client centricity: Integrated business services are defined by the way customers understand, buy and use them, which reduces the complexity of multiple functional silos. In IBS, the customer experience is of foremost importance, and greater emphasis is put on trust and partnership, rather than just having a buyer / seller, service level agreement (SLA)-based relationship

• End-to-end ownership: The model allows end-to-end ownership of budget, people, process, policy and technology. This level of control adds more value beyond process improvements within the back-office silos.

• Global agility: The model leverages the geographic footprint of the overall organisation and its strategic partners (including third-party providers) while maintaining proximity to the customer where required.

The IBS model functions on continuous improvement by looking for new capabilities in industry-specific areas that can provide greater value if they are grouped together and delivered as services to the business it supports.

For life sciences companies, moving to this model means going beyond core “mature” shared services functions, such as finance, HR and IT, and using the model to deliver industry-specific capabilities in other areas like:

• Research and development: Key R&D activities focused on delivery through an IBS model include data management, statistical programming and analysis, processing and analysis of pharmaco-vigilance safety cases across divisions, and document preparation and management.

• Supply chain: Specific supply chain services that an IBS model could provide for life sciences companies include operations strategy execution and end-to-end process excellence, more efficient innovation and product development services, as well as sourcing strategies, supplier management and compliance management.

• Analytics: Key services like data acquisition management, analytics delivery and business insights dissemination can be provided through this model.

Although life sciences companies have been slow to embrace the integrated business services model, we believe that there will soon be a rapid adoption of this model in multiple areas of business support. As we have seen in high performing organisations like Procter and Gamble and Cisco Systems, an IBS model can be a key enabler for companies to achieve their strategic objectives of growth, profitability and ultimately maximise shareholder value.

In conclusion, today’s turbulent environment means life sciences companies need to expand their focus from shared services’ transactional efficiency to achieving business outcomes. Companies that use IBS as a model have the potential to deliver new services that will help them advance key product innovations, implement new customer-focused commercial models, enhance responsiveness to changes in legislation and customer preferences and grow in new markets.

The journey to an IBS model is unique for every company. Indeed, on the one hand, there is no single, prescribed path to success, yet, on the other hand, there do exist a set of proven tenets (for example, unwavering executive support, strategic process optimisation, leveraging technology focused on business impact, sourcing and cultivating the very best talent, and becoming solution oriented and outcome focused) from which to build a distinctive capability based on the specific needs of the organisation. While challenges exist in any transformational programme, the opportunities abound with an IBS model as a catalyst for cost optimisation, growth, capability development and high performance.

References

1. Including process-specific technologies as well as service support technologies, cloud, mobility, social media, etc

About the author:

Chris McManus is a managing director and the management consulting lead for Accenture’s North American Life Sciences practice. Chris has over 17 years of experience as a global transformation consultant in Life Sciences, Consumer Goods and Services, Automotive and Industrial Products, and Retail. Chris has extensive experience in holistic transformation programs involving people, process and technology, integrated and global business services, back-office reengineering (finance, human resources/personnel and payroll administration, procurement and IT), and profit and cost optimization. He led Accenture’s Shared Services practice in North America before assuming his current role in the Life Sciences industry.

Why has the life science industry been slow to adopt the integrated business solution?